Category: Personal taxation in India

In addition to the ridiculously high VAT, our stupid authorities have added this nonsense of service tax, currently 15%. Too many people are busy posting incorrect information about taxation rules at restaurants. While this is highly appreciated, i.e. the more people are involved in spreading awareness about such matters, the better it is of course. But the problem is that incorrect information spreads just as fast. So lets lay the taxation angle to rest in this post.

All the service tax rates since the dawn of time are mentioned here. What was there before 1994 you ask? Shoonya. As per Indian mythology, if it wasnt there, then it didnt exist. We invented yet. Yo. Current rate starting 1/06/16 is a whopping 15%, and will go up much more once GST rolls in.

I’ve been filing my personal taxes online for a full decade now, and I do believe I was one of the first set of people in India to adopt this mechanism. I filed the first time for FY07 (AY 2007 – 2008) using Skorydov, which later changed their tax solution name to myITReturn. Since then, I’ve tried Taxsmile, Cleartax and HRBlock. This is a story about my experiences using all these e-filing solutions, and it has not always been a bed of roses.

A new (draft) Direct Tax Code (DTC) from April 2011 has been proposed by the Hon’ble Indian Finance Minister in Aug 2009. The DTC has undergone quite favorable analysis. Unfortunately, what articles like these have not brought out is the massive impact on long term investors of one simple clause which removes the distinction between Short Term Capital Gains (STCG) and Long Term Capital Gains (LTCG).

Contrary to what you might think, removal of FBT does not mean that taxation of ESOPs will stop. All that has happened is that the taxation in the hands of the employer has been shifted to the employee. So ESOPs, among other items will be treated as perquisite in the hands of the employee and taxed at the prevalent slab rates. Which for most of us will change nothing at all.